Wednesday, July 01, 2009
Manufacturing sector activity rose in June for the sixth straight month, but the index reading still indicates a contraction, according to the June 2009 Manufacturing ISM Report On Business®. The manufacturing index rose to 44.8 in June, up from 42.8 the previous month.
The slight month-to-month improvement indicates that the rate of contraction has slowed, but not reversed itself. "Manufacturing continues to contract at a slower rate, but the trends in the indexes are encouraging as seven of 18 industries reported growth in June," said Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee.
"Most encouraging is the gain in the Production Index, which is up 12.1 percentage points in the last two months to 52.5 percent. Aggressive inventory reduction continues and indications are that the de-stocking cycle is at or near the end in most industries, as the Customers' Inventories Index remained below 50 percent for the third consecutive month. The Prices Index was unchanged from May, indicating that the supply/demand balance is improving. Overall, a slow recovery for manufacturing is forming based on the current trends in the ISM data."
New Orders
ISM's New Orders Index registered 49.2 percent in June, 1.9 percentage points lower than the 51.1 percent registered in May. May represented the first month of growth in new orders, following 17 consecutive months of contraction. A New Orders Index above 48.8 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).
The 10 industries reporting growth in new orders in June — listed in order — are: Printing & Related Support Activities; Primary Metals; Wood Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Paper Products; Miscellaneous Manufacturing; Fabricated Metal Products; Electrical Equipment, Appliances & Components; and Chemical Products. The five industries contracting in June — listed in order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Machinery.
Production
ISM's Production Index registered 52.5 percent in June, which is an increase of 6.5 percentage points from May's reading of 46 percent. An index above 50.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. This is the first month the Production Index has moved above 50 percent, following nine months of contraction.
The 11 industries reporting growth in production during the month of June — listed in order — are: Petroleum & Coal Products; Nonmetallic Mineral Products; Printing & Related Support Activities; Wood Products; Paper Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Chemical Products; Miscellaneous Manufacturing; Fabricated Metal Products; and Computer & Electronic Products. The five industries reporting decreases in production in June — listed in order — are: Furniture & Related Products; Apparel, Leather & Allied Products; Textile Mills; Transportation Equipment; and Machinery.
Employment
ISM's Employment Index registered 40.7 percent in June, which is 6.4 percentage points higher than the 34.3 percent reported in May. This is the 11th consecutive month of decline in employment. An Employment Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Three of the 18 manufacturing industries reported growth in employment in June: Petroleum & Coal Products; Nonmetallic Mineral Products; and Miscellaneous Manufacturing. The 13 industries that reported decreases in employment during June — listed in order — are: Furniture & Related Products; Apparel, Leather & Allied Products; Textile Mills; Electrical Equipment, Appliances & Components; Machinery; Primary Metals; Fabricated Metal Products; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; and Plastics & Rubber Products.
Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was slower in June as the Supplier Deliveries Index registered 50.6 percent, which is 0.8 percentage point higher than the 49.8 percent registered in May. This is the first month that the Supplier Deliveries Index has been above 50 percent, following eight months of faster delivery performance. A reading above 50 percent indicates slower deliveries.
The five industries reporting slower supplier deliveries in June are: Printing & Related Support Activities; Furniture & Related Products; Fabricated Metal Products; Transportation Equipment; and Chemical Products. The three industries reporting faster deliveries in June are: Primary Metals; Plastics & Rubber Products; and Computer & Electronic Products.
Inventories
Manufacturers' inventories contracted in June as the Inventories Index registered 30.8 percent, which is 2.1 percentage points lower than May's reading of 32.9 percent. An Inventories Index greater than 42.6 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
Textile Mills is the only one of the 18 manufacturing industries reporting higher inventories in June. The 13 industries that reported decreases in June — listed in order — are: Plastics & Rubber Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Computer & Electronic Products; Machinery; Furniture & Related Products; Paper Products; Fabricated Metal Products; Transportation Equipment; Miscellaneous Manufacturing; Chemical Products; and Food, Beverage & Tobacco Products.
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